The Impact of Integrated Care on Healthcare Utilization and Costs: Evidence from the Kansas Health Homes Medicaid Program

Context: Individuals with complex conditions—those with multiple physical, mental, or behavioral health conditions--require numerous health and social services that are not effectively co-delivered by the current healthcare system. These individuals are often high utilizers of health care services, with some of the costliest services being hospital admissions and emergency department (ED) visits. Integrated care (IC), defined as efforts to coordinate primary and mental health care to assist patients and caregivers in managing physical and behavioral health conditions, has emerged as a promising model to improve the care of complex patients while lowering costs;

Objective: To analyze the effect of Kansas Health Homes (KHH), an IC program developed for Medicaid beneficiaries with Serious Mental Illness, on health service utilization and costs;

Study Design and Analysis: The implementation of KHH was used as a natural experiment to assess potential causal relationships. A difference-in-differences (DID) approach was used to compare outcomes in two groups: Medicaid beneficiaries assigned to KHH and those who were not. A series of robustness and sensitivity tests were also conducted;

Dataset: Kansas Medicaid administrative data, 2012-2018;

Population studied: Kansas Medicaid beneficiaries, ages 18-64, with a diagnosis of Serious Mental Illness;

Intervention: The Kansas Health Homes program, an optional Medicaid state plan amendment that integrates primary and mental healthcare;

Outcome Measures: The probability of ED visits and hospitalizations and per member per month (PMPM) Kansas Medicaid costs;

Results: Consistent with previous literature, we found a decrease in ED visits for the treatment group. While previous studies found no association between IC programs and reduced hospitalizations, we found a statistically significant decrease in hospitalizations for the intervention group. Additionally, we found a statistically significant reduction in PMPM Kansas Medicaid costs. All three outcome measures show long-term effects, with additional reductions at 12- and 24-months;

Conclusions: This study contributes to the literature by expanding what is known about how integrated care programs impact health services utilization and cost. This study also provides the first formal evaluation of the KHH program.